Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following MD&A is intended to assist the reader in understanding Amgen’s business. MD&A is provided as a supplement to, and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2025 and June 30, 2025. Our results of operations discussed in MD&A are presented in conformity with GAAP. Amgen operates in one operating segment: human therapeutics. Therefore, our results of operations are discussed on a consolidated basis.

Forward-looking statements

This report and other documents we file with the SEC contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our business, our beliefs and our management’s assumptions. In addition, we, or others on our behalf, may make forward-looking statements in press releases, written statements or our communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls and conference calls. Such words as “expect,” “anticipate,” “outlook,” “could,” “target,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “should,” “may,” “assume” and “continue” as well as variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance, and they involve certain risks, uncertainties and assumptions that are difficult to predict. We describe our respective risks, uncertainties and assumptions that could affect the outcome or results of operations in Item 1A. Risk Factors in Part II herein and in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024, and in Part II, Item 1A. Risk Factors of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2025 and June 30, 2025. We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecasted by our forward-looking statements. Reference is made in particular to forward-looking statements regarding product sales, regulatory activities, clinical trial results, reimbursement, expenses, EPS, liquidity and capital resources, trends, planned dividends, stock repurchases, and collaborations. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

Overview

Amgen Inc. (including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) discovers, develops, manufactures and delivers innovative medicines to fight some of the world’s toughest diseases. We focus on areas of high unmet medical need and leverage our expertise to strive for solutions that dramatically improve people’s lives, while also reducing the social and economic burden of disease. We helped launch the biotechnology industry more than 40 years ago and have grown to be one of the world’s leading independent biotechnology companies. Our robust pipeline includes potential first-in-class medicines at all stages of development.

Our principal products are Prolia, Repatha, ENBREL, Otezla, XGEVA, EVENITY, TEPEZZA, BLINCYTO, Nplate, KYPROLIS, Aranesp, TEZSPIRE, KRYSTEXXA and Vectibix. We also market a number of other products, including but not limited to MVASI, PAVBLU, AMJEVITA/AMGEVITA, UPLIZNA, IMDELLTRA/IMDYLLTRA, TAVNEOS, RAVICTI, Neulasta, LUMAKRAS/LUMYKRAS, Parsabiv, Aimovig, WEZLANA/WEZENLA and PROCYSBI.

Tariffs and trade protection measures

Numerous tariffs and trade protection measures have been proposed, and in a number of cases, implemented by the United States and other countries. These tariffs and trade protection measures include the universal 10% tariff on goods imported into the United States, the July Tariff EOs imposing additional country-specific tariffs for more than 60 countries, the trade framework with the EU effective September 2025 that imposes a baseline 15% tariff on most goods from the EU, bilateral trade deals with certain other countries such as Vietnam, Japan and the United Kingdom for special tariff rates, China’s country-specific tariff that is expected to become effective on November 10, 2025, and retaliatory tariffs on U.S. goods. These tariffs and trade protection measures may adversely affect our business and results of operations. Further, there are a number of proposed and potential sector-specific tariffs on our industry that are in development. See Part II, Item 1A. Risk Factors*—Global economic conditions may negatively affect us and may magnify certain risks that affect our business,* of this Quarterly Report on Form 10-Q for further discussion. While existing tariffs have not had a material adverse effect on our results of operations for the nine months ended September 30, 2025, certain tariffs that are currently in effect, or anticipated to take effect in the future, are expected to further increase our manufacturing and operating expenses in future quarters, including the cost to deliver products to markets, cost of sourcing materials for the manufacturing of our products and cost of materials used in our R&D activities. Furthermore, such tariffs may increasingly affect the cost to expand our manufacturing capacity in the United

States, including increased construction costs and/or delays in construction for our Ohio and North Carolina facilities. Additionally, retaliatory tariffs imposed by other countries may adversely affect our business, operations and delivery and launches of products in such markets, including the performance of our collaborations in such markets. However, the degree of adverse effects from any tariffs on our business and operations in future periods will depend on various factors, including the application and rates of such tariffs, as well as the expansion of such tariffs to include certain goods (such as pharmaceutical products), the magnitude of response by other countries to U.S. tariffs and the length of time such tariffs are in effect. For additional discussion of these and other risks, see Part II, Item 1A. Risk Factors, of this Quarterly Report on Form 10-Q.

Macroeconomic and other challenges

Uncertain macroeconomic conditions, including the risk of inflation, fluctuating interest rates and instability in the financial system, as well as rising healthcare costs, continue to pose challenges to our business. Uncertainty around tariffs and trade protection measures in the United States and other countries, including the imposition of new, retaliatory or sector-specific tariffs, along with ongoing geopolitical conflicts and rising geopolitical tensions, continue to create additional uncertainty in global macroeconomic conditions. Additionally, with public and private healthcare-provider focus, the industry continues to be subject to cost containment measures and significant pricing pressures, resulting in net price declines.

Moreover, provisions of the IRA, as well as the 340B Program, have negatively affected, and are likely to continue to negatively affect, our business. For example, ENBREL and Otezla have been selected by CMS for Medicare price setting beginning in 2026 and 2027, respectively. In addition to the IRA, other recent and proposed U.S. policy actions focus on drug pricing, including the Most-Favored-Nations Prescription Drug Pricing Executive Order (MFN EO) that is aimed at using price benchmarks from other developed countries to set U.S. pricing targets, and the July MFN Letter that was delivered to many pharmaceutical companies, including Amgen, and called for drug manufacturers to: 1) extend MFN pricing to Medicaid; 2) guarantee MFN pricing to Medicaid, Medicare and commercial payers on all newly launched drugs; 3) use future increased revenues from outside the United States to reduce U.S. drug prices; and 4) participate in direct-to-consumer models to provide MFN pricing for certain drugs. The details of these drug pricing actions and how they might be operationalized are unclear, but if put into place they could reasonably be expected to adversely affect our business. See Part II, Item 1A. Risk Factors*—Changing U.S. federal coverage and reimbursement policies and practices have affected, and are likely to continue to affect, access to, pricing of, and sales of our products,* of this Quarterly Report on Form 10-Q for further discussion.

Finally, wholesale and end-user buying patterns can affect our product sales. These buying patterns can cause fluctuations in quarterly product sales, but have generally not been significant to date when comparing full-year product performance to the prior year. For additional discussion of these and other risks, see Part II, Item 1A. Risk Factors, of this Quarterly Report on Form 10-Q.

Significant developments

The following is a summary of select significant developments affecting our business that occurred since the filing of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025. For additional developments, see our Annual Report on Form 10-K for the year ended December 31, 2024 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2025 and June 30, 2025.

Products/pipeline

Repatha

In August 2025, we announced that the FDA broadened the approved use of Repatha to include adults at increased risk for major adverse cardiovascular events (MACE) due to uncontrolled low-density lipoprotein cholesterol (LDL-C). The update removes a prior requirement for a patient to have been diagnosed with cardiovascular (CV) disease.

In October 2025, we announced that the Phase 3 VESALIUS-CV trial met its dual primary endpoints demonstrating that Repatha significantly reduced the risk of MACE in individuals without a prior history of heart attack or stroke. No new safety signals were observed.

TEZSPIRE

In October 2025, we announced that the FDA approved TEZSPIRE for the add-on maintenance treatment of inadequately controlled chronic rhinosinusitis with nasal polyps (CRSwNP) in adult and pediatric patients aged 12 years and older.

Bemarituzumab

In November 2025, we announced that FORTITUDE-102, a Phase 1b/3 study of bemarituzumab plus chemotherapy and nivolumab in patients with first-line gastric cancer, was stopped.

Selected financial information

The following is an overview of our results of operations (in millions, except percentages and per-share data):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
Product sales
U.S.$6,751$5,97913%$18,737$16,79212%
ROW2,3862,17210%7,0446,5188%
Total product sales9,1378,15112%25,78123,31011%
Other revenues42035219%1,1041,0287%
Total revenues$9,557$8,50312%$26,885$24,33810%
Operating expenses$7,031$6,4569%$20,525$19,3916%
Operating income$2,526$2,04723%$6,360$4,94729%
Net income$3,216$2,83014%$6,378$3,46384%
Diluted EPS$5.93$5.2214%$11.77$6.4084%
Diluted shares542542—%5425410%

In the following discussion of changes in product sales, any reference to unit demand growth or decline refers to changes in purchases of our products by healthcare providers (such as physicians or their clinics), dialysis centers, hospitals and pharmacies. In addition, any reference to increases or decreases in inventory refers to changes in inventory held by wholesaler customers and end users (such as pharmacies) as may be noted.

Total product sales increased 12% and 11% for the three and nine months ended September 30, 2025, respectively, driven by volume growth of 14% for both periods, partially offset by declines in net selling price of 4% and 3%, respectively.

For the three months ended September 30, 2025, U.S. volume grew 13% and ROW volume grew 16%, driven by volume growth in certain brands, including PAVBLU, Repatha, EVENITY, IMDELLTRA/IMDYLLTRA, TEZSPIRE and BLINCYTO.

For the nine months ended September 30, 2025, U.S. and ROW volumes grew 14% each, driven by volume growth in certain brands, including Repatha, PAVBLU, EVENITY, TEZSPIRE, IMDELLTRA/IMDYLLTRA and BLINCYTO.

For the remainder of 2025, we expect volume growth from certain brands to be partially offset by net selling price declines.

Other revenues increased 19% and 7% for the three and nine months ended September 30, 2025, respectively, primarily driven by higher royalty income.

Operating expenses increased 9% and 6% for the three and nine months ended September 30, 2025, respectively, driven by investments in Later-Stage Clinical Programs and Otezla intangible asset impairment charges, partially offset by lower amortization expense from the fair value step-up of inventory acquired from Horizon. See Note 8, Goodwill and other intangible assets, to the condensed consolidated financial statements, for additional information related to the Otezla intangible asset impairment charges.

Uncertain macroeconomic conditions, including uncertainty around tariffs and trade protection measures, ongoing geopolitical conflicts and rising geopolitical tensions, changes in the healthcare ecosystem, and potential government policy actions, including MFN pricing or similar drug pricing reforms, have the potential to introduce variability into product sales. Furthermore, product sales continue to be impacted by actions from governments and other entities to address macroeconomic challenges, provisions of the IRA, inappropriate expanded utilization of the 340B Program and growth in numbers of Medicaid enrollees and uninsured individuals. See Part I, Item 1. Business—Reimbursement, and Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024; and Part II, Item 1A. Risk Factors, of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2025, June 30, 2025 and September 30, 2025.

Results of operations

Product sales

Worldwide product sales were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
Prolia$1,139$1,0459%$3,360$3,2095%
Repatha79456740%2,1461,61633%
ENBREL580825(30)%1,6942,301(26)%
Otezla5855644%1,6401,5029%
XGEVA5395410%1,6371,664(2)%
EVENITY54139936%1,5011,13233%
TEPEZZA56048815%1,4461,3914%
BLINCYTO39232720%1,14683537%
Nplate4574560%1,1391,1192%
KYPROLIS359378(5)%1,0611,131(6)%
Aranesp3573376%1,0561,0342%
TEZSPIRE(1)37726940%1,00467649%
KRYSTEXXA3203103%9058398%
Vectibix2842821%8567997%
Other products(2)1,8531,36336%5,1904,06228%
Total product sales$9,137$8,15112%$25,781$23,31011%

(1) TEZSPIRE is marketed by our collaborator AstraZeneca outside the United States.

(2) Consists of product sales of our non-principal products.

Future sales of our products will depend in part on the factors discussed below and in the following sections of this report: (i) Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview, and Selected financial information; and (ii) Part II, Item 1A. Risk Factors, and in the following sections of our Annual Report on Form 10-K for the year ended December 31, 2024: (i) Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products; (ii) Part I, Item 1A. Risk Factors; and (iii) Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview, and Results of operations—Product sales, as well as in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2025 and June 30, 2025: (i) Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of operations—Product sales; and (ii) Part II, Item 1A. Risk Factors.

Prolia

Total Prolia sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
Prolia — U.S.$806$68318%$2,271$2,1108%
Prolia — ROW333362(8)%1,0891,099(1)%
Total Prolia$1,139$1,0459%$3,360$3,2095%

The increase in global Prolia sales for the three months ended September 30, 2025 was primarily driven by favorable changes to estimated sales deductions of 14%, partially offset by lower net selling price.

The increase in global Prolia sales for the nine months ended September 30, 2025 was driven by volume growth.

For the remainder of 2025, we expect sales erosion driven by biosimilar competition, as biosimilars have launched in the U.S. market.

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products—Patents, our patents for RANKL antibodies, including sequences, for Prolia and XGEVA expired in February 2025 in the United States and will expire in November 2025 in select countries in Europe.

For a discussion of litigation, including associated settlements, related to Prolia, see Part IV—Note 20, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024; and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2025, June 30, 2025 and September 30, 2025.

Repatha

Total Repatha sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
Repatha — U.S.$442$28157%$1,146$82439%
Repatha — ROW35228623%1,00079226%
Total Repatha$794$56740%$2,146$1,61633%

The increases in global Repatha sales for the three and nine months ended September 30, 2025 were primarily driven by volume growth.

For a discussion of ongoing litigation related to Repatha, see Part IV—Note 20, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024; and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2025, June 30, 2025 and September 30, 2025.

ENBREL

Total ENBREL sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
ENBREL — U.S.$574$817(30)%$1,675$2,280(27)%
ENBREL — Canada68(25)%1921(10)%
Total ENBREL$580$825(30)%$1,694$2,301(26)%

The decrease in ENBREL sales for the three months ended September 30, 2025 was primarily driven by lower net selling price of 38% resulting from the impact of the U.S. Medicare Part D redesign and increased 340B Program mix, partially offset by favorable changes to estimated sales deductions and volume growth.

The decrease in ENBREL sales for the nine months ended September 30, 2025 was driven by lower net selling price of 30% resulting from increased 340B Program mix, the impact of the U.S. Medicare Part D redesign and higher commercial discounts, partially offset by volume growth.

Otezla

Total Otezla sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
Otezla — U.S.$473$4603%$1,328$1,18512%
Otezla — ROW1121048%312317(2)%
Total Otezla$585$5644%$1,640$1,5029%

The increase in global Otezla sales for the three months ended September 30, 2025 was primarily driven by volume growth of 6% and favorable changes to estimated sales deductions of 5%, partially offset by lower net selling price of 5%.

The increase in global Otezla sales for the nine months ended September 30, 2025 was driven by volume growth of 5%, favorable changes to estimated sales deductions of 3% and higher net selling price of 2%.

In January 2025, Otezla was selected by CMS for Medicare price setting that will be applicable beginning in 2027. As a result, we expect further declines in net selling price driven by Medicare price setting beginning in 2027. See Note 8, Goodwill and other intangible assets, to the condensed consolidated financial statements, for additional information related to the Otezla intangible asset impairment charges.

XGEVA

Total XGEVA sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
XGEVA — U.S.$357$373(4)%$1,064$1,138(7)%
XGEVA — ROW1821688%5735269%
Total XGEVA$539$5410%$1,637$1,664(2)%

Global XGEVA sales remained relatively unchanged for the three months ended September 30, 2025, as favorable changes to estimated sales deductions of 6% were offset by lower volume of 3% and lower inventory.

The decrease in global XGEVA sales for the nine months ended September 30, 2025 was driven by lower volume.

For the remainder of 2025, we expect sales erosion driven by biosimilar competition, as biosimilars have launched in the U.S. market.

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products—Patents, our patents for RANKL antibodies, including sequences, for Prolia and XGEVA expired in February 2025 in the United States and will expire in November 2025 in select countries in Europe.

For a discussion of litigation, including associated settlements, related to XGEVA, see Part IV—Note 20, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024; and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2025, June 30, 2025 and September 30, 2025.

EVENITY

Total EVENITY sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
EVENITY — U.S.$417$28944%$1,132$80640%
EVENITY — ROW12411013%36932613%
Total EVENITY$541$39936%$1,501$1,13233%

The increases in global EVENITY sales for the three and nine months ended September 30, 2025 were driven by volume growth.

TEPEZZA

Total TEPEZZA sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
TEPEZZA — U.S.$518$4827%$1,349$1,379(2)%
TEPEZZA — ROW426*9712*
Total TEPEZZA$560$48815%$1,446$1,3914%
  • Change in excess of 100%

The increase in global TEPEZZA sales for the three months ended September 30, 2025 was driven by higher inventory and higher net selling price.

The increase in global TEPEZZA sales for the nine months ended September 30, 2025 was driven by higher net selling price of 5% and higher inventory of 2%, partially offset by lower volume.

BLINCYTO

Total BLINCYTO sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
BLINCYTO — U.S.$236$2370%$779$55540%
BLINCYTO — ROW1569073%36728031%
Total BLINCYTO$392$32720%$1,146$83537%

The increase in global BLINCYTO sales for the three months ended September 30, 2025 was driven by volume growth of 31%, partially offset by lower inventory.

The increase in global BLINCYTO sales for the nine months ended September 30, 2025 was primarily driven by volume growth.

Nplate

Total Nplate sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
Nplate — U.S.$333$345(3)%$762$7492%
Nplate — ROW12411112%3773702%
Total Nplate$457$4560%$1,139$1,1192%

Global Nplate sales for the three months ended September 30, 2025 remained relatively unchanged and included U.S. government orders of $90 million and $128 million for the three months ended September 30, 2025 and 2024, respectively. Excluding the U.S. government orders from this comparison, global Nplate sales increased 12% for the three months ended September 30, 2025, driven by volume growth.

Global Nplate sales for the nine months ended September 30, 2025 increased 2% and included U.S. government orders of $90 million and $128 million for the nine months ended September 30, 2025 and 2024, respectively. Excluding the U.S. government orders from this comparison, global Nplate sales increased 6% for the nine months ended September 30, 2025, primarily driven by volume growth.

KYPROLIS

Total KYPROLIS sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
KYPROLIS — U.S.$225$238(5)%$673$712(5)%
KYPROLIS — ROW134140(4)%388419(7)%
Total KYPROLIS$359$378(5)%$1,061$1,131(6)%

The decreases in global KYPROLIS sales for the three and nine months ended September 30, 2025 were driven by lower volume due to increased competition.

Aranesp

Total Aranesp sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
Aranesp — U.S.$103$105(2)%$301$2962%
Aranesp — ROW2542329%7557382%
Total Aranesp$357$3376%$1,056$1,0342%

The increases in global Aranesp sales for the three and nine months ended September 30, 2025 were driven by volume growth of 10% and 5%, respectively, partially offset by unfavorable changes to foreign currency exchange rates of 2% for each period and lower net selling price.

TEZSPIRE

Total TEZSPIRE sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
TEZSPIRE — U.S.$377$26940%$1,004$67649%

The increase in TEZSPIRE sales for the three months ended September 30, 2025 was driven by volume growth of 48%, partially offset by lower net selling price.

The increase in TEZSPIRE sales for the nine months ended September 30, 2025 was primarily driven by volume growth.

KRYSTEXXA

Total KRYSTEXXA sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
KRYSTEXXA — U.S.$320$3103%$905$8398%

The increase in KRYSTEXXA sales for the three months ended September 30, 2025 was driven by volume growth of 9% and higher net selling price of 3%, partially offset by lower inventory of 10%.

The increase in KRYSTEXXA sales for the nine months ended September 30, 2025 was driven by volume growth.

Vectibix

Total Vectibix sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
Vectibix — U.S.$162$13223%$441$38515%
Vectibix — ROW122150(19)%4154140%
Total Vectibix$284$2821%$856$7997%

Global Vectibix sales remained relatively unchanged for the three months ended September 30, 2025.

The increase in global Vectibix sales for the nine months ended September 30, 2025 was driven by volume growth.

Other products

Other product sales by geographic region were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
MVASI — U.S.$156$13615%$436$34128%
MVASI — ROW5759(3)%147213(31)%
PAVBLU — U.S.212—N/A437—N/A
PAVBLU — ROW1—N/A5—N/A
AMJEVITA — U.S.1628(43)%2049(59)%
AMGEVITA — ROW138138—%403418(4)%
UPLIZNA — U.S.1467497%36022163%
UPLIZNA — ROW932(72)%62579%
IMDELLTRA — U.S.14436*33048*
IMDYLLTRA — ROW34—N/A63—N/A
TAVNEOS — U.S.1017436%28118056%
TAVNEOS — ROW66—%262218%
RAVICTI — U.S.104986%2942863%
RAVICTI — ROW19(89)%1012(17)%
Neulasta — U.S.7284(14)%244246(1)%
Neulasta — ROW2026(23)%5987(32)%
LUMAKRAS — U.S.57538%1641612%
LUMYKRAS — ROW3945(13)%1071043%
Parsabiv — U.S.423231%143164(13)%
Parsabiv — ROW423811%1211173%
Aimovig — U.S.907717%2392228%
Aimovig — ROW55—%16157%
WEZLANA — U.S.——N/A123—N/A
WEZENLA — ROW445*1066*
PROCYSBI — U.S.62579%1741609%
PROCYSBI — ROW11—%56(17)%
Other — U.S.(1)206209(1)%662780(15)%
Other — ROW(1)484117%1531474%
Total other products$1,853$1,36336%$5,190$4,06228%
Total U.S. — other products$1,408$95847%$3,907$2,85837%
Total ROW — other products44540510%1,2831,2047%
Total other products$1,853$1,36336%$5,190$4,06228%

N/A = not applicable

  • Change in excess of 100%

(1) Consists of product sales from AVSOLA, KANJINTI, EPOGEN, RIABNI, BKEMV/BEKEMV, ACTIMMUNE, NEUPOGEN, IMLYGIC, Corlanor, RAYOS, BUPHENYL, QUINSAIR, DUEXIS, Sensipar/Mimpara and PENNSAID.

Operating expenses

Operating expenses were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
20252024Change20252024Change
Operating expenses:
Cost of sales$3,082$3,310(7)%$9,061$9,746(7)%
% of product sales33.7%40.6%35.1%41.8%
% of total revenues32.2%38.9%33.7%40.0%
Research and development$1,900$1,45031%$5,130$4,24021%
% of product sales20.8%17.8%19.9%18.2%
% of total revenues19.9%17.1%19.1%17.4%
Selling, general and administrative$1,720$1,6256%$5,098$5,218(2)%
% of product sales18.8%19.9%19.8%22.4%
% of total revenues18.0%19.1%19.0%21.4%
Other$329$71*$1,236$187*
Total operating expenses$7,031$6,4569%$20,525$19,3916%
  • Change in excess of 100%

Cost of sales

Cost of sales decreased to 32.2% and 33.7% of total revenues for the three and nine months ended September 30, 2025, respectively, driven by lower amortization expense from the fair value step-up of inventory acquired from Horizon and lower manufacturing costs, partially offset by higher profit share expense and changes in our sales mix.

Research and development

The increase in R&D expense for the three months ended September 30, 2025, was driven by investments in Later-Stage Clinical Programs, including those related to MariTide.

The increase in R&D expense for the nine months ended September 30, 2025, was driven by investments in Later-Stage Clinical Programs, including those related to MariTide, partially offset by lower spend in Marketed Product Support and Research and Early Pipeline.

We expect to continue to grow our spend on Later-Stage Clinical Programs as we advance our pipeline.

Selling, general and administrative

The increase in SG&A expense for the three months ended September 30, 2025, was driven by higher general and administrative expenses, partially offset by lower Horizon acquisition-related expenses.

The decrease in SG&A expense for the nine months ended September 30, 2025, was primarily driven by lower commercial product-related expenses and lower Horizon acquisition-related expenses, partially offset by higher general and administrative expenses.

Other

Other operating expenses for the three and nine months ended September 30, 2025, included Otezla intangible asset impairment charges of $400 million and $1.2 billion, respectively. See Note 8, Goodwill and other intangible assets, to the condensed consolidated financial statements.

Other operating expenses for the three and nine months ended September 30, 2024, included impairment charges associated with IPR&D assets and changes in the fair values of contingent consideration liabilities, both related to our Teneobio, Inc. acquisition from 2021.

Nonoperating expenses/income and income taxes

Nonoperating expenses/income and income taxes were as follows (dollar amounts in millions):

Three months ended September 30,Nine months ended September 30,
2025202420252024
Interest expense, net$(685)$(776)$(2,102)$(2,408)
Other income, net$2,080$1,830$3,204$1,288
Provision for income taxes$705$271$1,084$364
Effective tax rate18.0%8.7%14.5%9.5%

Interest expense, net

Interest expense, net, decreased for the three and nine months ended September 30, 2025, primarily due to lower average debt outstanding.

Other income, net

Other income, net, increased for the three and nine months ended September 30, 2025, primarily due to higher net unrealized gains on equity investments, primarily BeOne. See Note 6, Investments, to the condensed consolidated financial statements.

Income taxes

The increase in our effective tax rate for the three months ended September 30, 2025, was primarily due to the change in earnings mix, including lower amortization expense from the fair value step-up of inventory acquired from Horizon. The increase in our effective tax rate for the nine months ended September 30, 2025, was primarily due to the change in earnings mix, including the net unrealized gains on equity investments in the first nine months of 2025 compared to those in the prior-year period (see Note 6, Investments) and partially offset by the year-to-date Otezla impairment charges and related tax impacts (see Note 8, Goodwill and other intangible assets).

As previously reported, the OECD reached an agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries. Effective January 1, 2024, select individual countries, including the United Kingdom and EU member countries, have enacted the global minimum tax agreement. Additional countries, including Singapore, enacted the minimum tax agreement, effective January 1, 2025. Singapore’s enactment of the agreement applies irrespective of the Company’s incentive grant. Due to the currently enacted scope of the agreement, the Company and its subsidiaries are now subject to a 15% minimum tax rate on adjusted financial statement income. In June 2025, the United States and the other six countries that make up the G7 nations jointly announced that U.S. companies would be exempted from certain minimum taxes related to the OECD agreement. However, significant details regarding the G7 announcement remain uncertain and individual countries that have enacted the OECD agreement, including countries not within the G7, must amend their local legislation for the G7 announcement to become effective. The continued response of other countries, including the U.S. territory of Puerto Rico to the OECD agreement and the G7 announcement remains highly uncertain. The continued enactment of the OECD agreement, either by all OECD participants or unilaterally by individual countries, could result in tax increases or double taxation in the United States or foreign jurisdictions.

On July 4, 2025, OB3 was enacted in the United States. OB3 has various provisions, including the permanent extension of certain expiring provisions of the 2017 Tax Act and modifications to the international tax framework. The legislation has multiple effective dates, with certain provisions effective in 2026 and beyond. The impact of these changes on our deferred tax assets and liabilities was recorded in the third quarter of 2025 and did not have a material effect on our effective tax rate or on our condensed consolidated financial statements.

In 2017, we received an RAR and a modified RAR from the IRS for the years 2010–2012, proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2021, we filed a petition in the U.S. Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for the years 2010–2012 that we received in May and July 2021, which seek to increase our U.S. taxable income for the years 2010–2012 by an amount that would result in additional federal tax of approximately $3.6 billion, plus interest. Any additional tax that could be imposed for the years 2010–2012 would be reduced by up to approximately $900 million of repatriation tax previously accrued and paid on our foreign earnings.

In 2020, we received an RAR and a modified RAR from the IRS for the years 2013–2015, also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico similar to those proposed for the years 2010–2012. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2022, we filed a petition in the U.S. Tax Court to contest a Notice for the years 2013–2015 that we previously reported receiving in April 2022 that seeks to increase our U.S. taxable income for the years 2013–2015 by an amount that would result in additional federal tax of approximately $5.1 billion, plus interest. In addition, the Notice asserts penalties of approximately $2.0 billion. Any additional tax that could be imposed for the years 2013–2015 would be reduced by up to approximately $2.2 billion of repatriation tax previously accrued and paid on our foreign earnings.

We firmly believe that the IRS positions set forth in the 2010–2012 and 2013–2015 Notices are without merit. We are contesting the 2010–2012 and 2013–2015 Notices through the judicial process. The two cases were consolidated in the U.S. Tax Court on December 19, 2022. The trial began on November 4, 2024 and concluded on January 17, 2025. The parties filed opening post-trial briefs on June 13, 2025, and the Court held oral argument on July 16, 2025. The parties filed post-trial reply briefs on October 10, 2025. The Company expects a decision from the U.S. Tax Court no earlier than the second half of 2026.

We are currently under examination by the IRS for the years 2016–2018 with respect to issues similar to those for the 2010 through 2015 period. We expect that the IRS will begin its audit of 2019–2022 in 2025 or early 2026, and we believe that it may seek to continue to audit similar issues related to the allocation of income between the United States and our foreign jurisdictions. In addition, we are under examination by a number of state and foreign tax jurisdictions.

Final resolution of these complex matters is not likely within the next 12 months. We continue to believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities; however, due to the complexity of the provision for income taxes and uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse impact on our condensed consolidated financial statements.

See our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, Part II, Item 1A. Risk Factors—We could be subject to additional tax liabilities, including from an adverse outcome in our ongoing tax dispute with the IRS and other tax examinations, enactment of the OECD minimum corporate tax rate agreement and the adoption and interpretation of new tax legislation including the OBBBA. Such tax liabilities could adversely affect our profitability and results of operations, and Note 4, Income taxes, to the condensed consolidated financial statements of this Quarterly Report on Form 10-Q for further discussion.

Financial condition, liquidity and capital resources

Selected financial data were as follows (in millions):

September 30, 2025December 31, 2024
Cash and cash equivalents$9,445$11,973
Total assets$90,141$91,839
Current portion of long-term debt$2,153$3,550
Long-term debt$52,434$56,549
Stockholders’ equity$9,619$5,877

Cash and cash equivalents

Our balance of cash and cash equivalents was $9.4 billion as of September 30, 2025. The primary objective of our investment portfolio is to maintain safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy limits interest-bearing security investments to certain types of debt and money market instruments issued by institutions with primarily investment-grade credit ratings, and it places restrictions on maturities and concentration by asset class and issuer.

Capital allocation

Consistent with the objective to optimize our capital structure, we deploy our accumulated cash balances in a strategic manner and consider a number of alternatives, including investments in innovation both internally and externally (including

investments that expand our portfolio of products in areas of therapeutic interest), capital expenditures, repayment of debt, payment of dividends and stock repurchases.

We intend to continue investing in our business while reducing our debt and returning capital to stockholders through the payment of cash dividends and stock repurchases. This reflects our desire to optimize our cost of capital and our confidence in the future cash flows of our business. The timing and amount of future dividends and stock repurchases will vary based on a number of factors, including future capital requirements for strategic transactions, debt levels and debt service requirements, our credit rating, availability of financing on acceptable terms, changes to applicable tax laws or corporate laws, changes to our business model and periodic determination by our Board of Directors that cash dividends and/or stock repurchases are in the best interests of stockholders and are in compliance with applicable laws and the Company’s agreements. In addition, the timing and amount of stock repurchases may also be affected by our overall level of cash, stock price and blackout periods, during which we are restricted from repurchasing stock. The manner of stock repurchases may include block purchases, tender offers, accelerated share repurchases and market transactions.

In August 2025, March 2025 and December 2024, our Board of Directors declared quarterly cash dividends of $2.38 per share of common stock, which were paid in September 2025, June 2025 and March 2025, respectively, an increase of 6% over the quarterly cash dividends paid each quarter in 2024. In October 2025, our Board of Directors declared a quarterly cash dividend of $2.38 per share of common stock, which will be paid in December 2025.

During the nine months ended September 30, 2025, we did not repurchase shares under our stock repurchase program. As of September 30, 2025, $6.8 billion of authorization remained available under the stock repurchase program.

As a result of stock repurchases and quarterly dividend payments, we have an accumulated deficit as of September 30, 2025 and December 31, 2024. Our accumulated deficit is not anticipated to affect our future ability to operate, repurchase stock, pay dividends or repay our debt given our expected continued profitability and strong financial position.

During the nine months ended September 30, 2025 and 2024, debt repayments totaled $5.0 billion and $3.6 billion, respectively. In addition, we opportunistically repurchase our debt when market conditions are favorable. During the nine months ended September 30, 2025 and 2024, we repurchased aggregate principal amounts of our debt of $1.0 billion and $875 million, respectively, for aggregate costs of $683 million and $659 million, respectively, which resulted in the recognition of gains on extinguishment of debt of $264 million and $215 million, respectively, recorded in Other income, net, in the Condensed Consolidated Statements of Income.

We believe that existing funds, cash generated from operations and existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditure and debt service requirements, as well as our plans to reduce debt, pay dividends and repurchase stock, and other business initiatives we plan to strategically pursue, including acquisitions and licensing activities. We anticipate that our liquidity needs can be met through a variety of sources, including cash provided by operating activities, borrowings through commercial paper and/or syndicated credit facilities and access to other domestic and foreign debt markets and equity markets. See Part II, Item 1A. Risk Factors—Global economic conditions may negatively affect us and may magnify certain risks that affect our business, of this Quarterly Report on Form 10-Q.

Certain of our financing arrangements contain nonfinancial covenants. In addition, our revolving credit agreement and term loan credit agreement include a financial covenant that requires us to maintain a specified minimum interest coverage ratio of (i) the sum of consolidated net income, interest expense, provision for income taxes, depreciation expense, amortization expense, unusual or nonrecurring charges and other noncash items (consolidated earnings before interest, taxes, depreciation and amortization) to (ii) Consolidated Interest Expense, each as defined and described in the respective agreements. We were in compliance with all applicable covenants under these arrangements as of September 30, 2025.

Cash flows

Our summarized cash flow activity was as follows (in millions):

Nine months ended September 30,
20252024
Net cash provided by operating activities$8,355$6,719
Net cash used in investing activities$(1,250)$(644)
Net cash used in financing activities$(9,633)$(8,008)

Operating

Cash provided by operating activities has been and is expected to continue to be our primary recurring source of funds. Cash provided by operating activities during the nine months ended September 30, 2025, increased as compared to the same period in the prior year primarily due to higher net income in the current year period after adjustments for noncash items, the timing of tax payments, including an $800 million tax deposit made in the first quarter of 2024, and the timing of working capital items.

Investing

Cash used in investing activities during the nine months ended September 30, 2025 and 2024, was primarily due to capital expenditures of $1.2 billion and $725 million, respectively, including construction costs for new plants and expansion of manufacturing capacity. We currently estimate full year 2025 investments in capital projects to be in the range of $2.2 billion to $2.3 billion.

Financing

Cash used in financing activities during the nine months ended September 30, 2025, was primarily due to the repayment and extinguishment of debt of $5.0 billion and $683 million, respectively, and the payment of dividends of $3.8 billion. Cash used in financing activities during the nine months ended September 30, 2024, was primarily due to the repayment and extinguishment of debt of $3.6 billion and $659 million, respectively, and the payment of dividends of $3.6 billion. See Note 9, Financing arrangements, and Note 10, Stockholders’ equity, to the condensed consolidated financial statements for further discussion.

Critical accounting policies and estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the notes to the financial statements. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions. A summary of our critical accounting policies and estimates is presented in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting policies and estimates during the nine months ended September 30, 2025.

Recently issued accounting standards

For a discussion of recently issued accounting standards, see Note 1, Significant accounting policies, to the condensed consolidated financial statements.

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